Shape Collage is an iPhone app that was released earlier today. It allows you to choose a number of photos to create a collage in shape. I gave it a quick spin and it was a bit unstable (1 crash in 3 tries). The output resolution seems to maximize at 1024px on the long side.
It is just version 1.0.0, so there is lots of room for improvement. Here quick sample where I just selected a few images (so there are numerous duplicates). In the app there is a select all option, which would be very nice for an album of selected images. Click on it for full size image.
You can download Shape Collage on iTunes. It is a free app at this time.
Description from iTunes:
Shape Collage is an automatic photo collage maker that takes your photos in your iPhone or iPod Touch and creates collages in different shapes in just seconds with only a few taps. Shape Collage can arrange your photos to form the shape of a heart, circle, word, and other shapes.
You can create a collage with up to 100 photos and the photos are intelligently placed to make the collage look good. You can save the collage to your photo library, email it, or share your collage on Facebook or Twitter.